[Dialogue] On Tap at the WTO: Private Water

Thu Dec 15 23:30:40 EST 2005

Colleagues, the concern about water. Peace, Harry 
  _____  

AlterNet

On Tap at the WTO: Private Water

By Joshua Holland, AlterNet
Posted on December 15, 2005, Printed on December 15, 2005
http://www.alternet.org/story/29639/

Hong Kong -- Activists gathered here say that no issue highlights the
tension between the human values they advocate and the economic logic of the
legion of corporate globalizers that have descended on this city more
clearly than water.

Water is viewed as one of the last "profit centers" by the international
financial institutions and trade can impact whether it becomes a commodity
or stays in public hands -- 90 percent of the world's water supplies remain
in the public trust. Most notably water's on the table with the
privatization of municipal water systems being aggressively pushed under the
General Agreement on Trade in Services (GATS), a wide-ranging treaty that
covers a host of services, both public and private.

Vandana Shiva, the scientist and global justice activist, argued this week
that "we need to recognize that 90 percent of humanity lives on water as
commons today." She lambasted a recent World Bank report urging poor
countries to privatize their water systems, saying, "It actually talks about
one major threat to water markets being community rights to water, and says
these must be dismantled. As if there's something wrong with the commons, as
if it's a primitive stage of human existence."

According to the United Nations, 1.3 billion people in the world lack access
to clean water and worldwide demand is doubling every 20 years -- twice the
rate of population growth. By the year 2025, demand for fresh water is
expected to outstrip global supply by 56 percent. The issue gets scant
attention, but analysts say that while the advanced nations are likely to
wean themselves of their addiction to oil, water is the finite resource that
will drive this century's wars just as fossil fuels did the last century's.

Maude Barlowe is the Director of the Council of Canadians, an NGO deep in
the fight. She told me the water privatizers are driven not only by profit,
but also by a deeper ideology. "There are those of us who believe that water
is a public good and should be protected in legislation at all levels as
something that must be kept out of the market system. And there are those
who've gone to the other side, and that would include the World Bank, the
regional development banks, the International Monetary Fund, the WTO and
most of the big first world countries. And they say that the only way to
avoid the global shortage of water that's already here for some places but
coming for the whole world is to privatize water, commodify it, put it on
the open market for sale to the highest bidder and have it guided by the
same rules that govern the trade in running shoes."

Pushing the agenda here in Hong Kong are a small number of multinationals
that dominate the growing water market. Two French titans, Vivendi Universal
and Suez, dominate the group. According to a report by the Canadian NGO
Polaris Institute in conjunction with Barlowe's Council of Canadians, the
two -- often called the General Motors and Ford of the global water industry
-- control over 70 percent of the existing world market in water services.

RWE, a German electricity and waste management company, may soon challenge
their market share. After purchasing two key water companies, RWE has
positioned itself to expand. The U.S. construction giant Bechtel, now
notorious for its no-bid reconstruction contracts in Iraq, is also a growing
player.

Under the GATS treaty being pushed in Hong Kong, any government in the WTO
would be required to give foreign investors like these mammoth water
corporations equal treatment with domestic investors like local
government-owned utilities. Governments would have to prove that any
legislation or regulation related to public water service is "necessary" and
"the least trade restrictive of all possible measures."

According to the NGOs, "in effect, government regulations requiring high
water quality standards for safety, accessible rates for poor communities,
or specific improvements in pipe infrastructure could be declared
"unnecessary" by a WTO tribunal."

Through the WTO's "coherence agreement" with the World Bank and
International Monetary Fund, the water behemoths get an additional wedge:
they're able to secure loans and grants to finance much of their operations
in the developing world. These institutions use water privatization as a
"conditionality" for development aid. A 2000 review of IMF loans in 40
countries found that 12 had loan conditions requiring some form of water
privatization. The NGOs point out that "in general, it is African countries
-- the smallest, poorest, and most debt ridden countries -- that experience
these conditions. Tragically, more than five million people die each year in
Africa from poor water access."

The big water corporations are active supporters of networks of water policy
think tanks and "lobby groups that prime the pump for privatization." The
network includes the Global Water Partnership, the World Water Council and
the World Commission on Water. All three have working relationships with
international finance institutions, the major corporate players in the water
industry and the governments of the big service economies.

A track record from hell

Wenonah Hauter, who heads the NGO Food and Water watch, says, "Privatization
is being touted as the most efficient, it's supposed to lead to much better
services than public water." But the track record of the private water
companies is "really terrible around the world, in the developing countries
and in the developed world."

The largest privatization in the U.S. was in Atlanta and Hauter describes it
as "a complete failure. The way that the company achieved its efficiency --
and this is true whether its Atlanta or Jakarta -- is that they fire staff.
Roughly half in Atlanta. At that point they are no longer able to really
maintain the pipes and provide potable water, so you had a relatively
wealthy city like Atlanta having brown water days -- people having to boil
their water and not being able to do laundry."

Maude Barlowe explains: "They pollute, they don't conserve water -- you
cannot make money conserving the product you sell, obviously, so it's not in
their interest to reclaim water, to set up good infrastructure. In the end
companies have to cut corners somewhere in order to make enough money for
investors -- there's just no other way. The public sector doesn't have to
turn a profit and the private sector does. So in the end, somewhere,
something's got to give, either the quality of the product or the safety of
the water coming into people's homes or the ability of poor people to access
it or all three."

According to the NGOs' report, the big three -- Suez, Vivendi and RWE -- and
their subsidiaries have been charged and fined for dozens of environmental
violations. A few examples they give:

*	In 1999, the Suez subsidiary Northumbrian Water was declared by the
Drinking Water Inspectorate in the U.K. to be the second worst company in
terms of operational performance in England and Wales. The main reason was
poor water quality: high levels of iron and manganese were found in the
water Northumbrian was delivering. Elsewhere, in Potsdam, Germany, city
officials terminated a contract with Suez when, after discovering that water
consumption levels were lower than predicted, the company demanded that
higher water rates be levied. Apparently, water revenues were more important
than water conservation. 
*	In 1994, Vivendi's main water subsidiary, Générale des Eaux, was
prosecuted for supplying poor quality water to the inhabitants of Tregeux,
France. Due to excessive use of nitrates and pesticides, Générale was
charged with supplying water unfit for consumption on 476 days between 1990
and 1993. In Puerto Rico, the EPA fined Vivendi's subsidiary, Compañía de
Aguas, $6.2 million dollars for environmental violations between 1995 and
2000. 
*	In the U.K., water corporations have been among the country's worst
environmental violators. Between 1989 and 1997, five water companies were
successfully prosecuted 128 times. In 1998, the U.K. environmental agency
ranked Wessex Water Co. the country's fourth worst polluter, while Anglian
Water was ranked the sixth worst polluter in 1999.

In Durban, South Africa, one privatization project turned deadly. South
Africa initiated one of five water privatization programs in 1999. According
to the Center for Public Integrity (CPI), the plan was "the brainchild of
private water companies and World Bank economists."

As many as 10 million South Africans had their water cut off at one time or
another since 1994, forcing thousands of poor Africans to seek water from
polluted rivers and lakes. Drinking contaminated water led to South Africa's
worst outbreak of cholera. Thousands of people got the disease and 300 died.

David Hemson of South Africa's Human Sciences Research Council told CPI the
privatization plan "was the direct cause of the cholera epidemic, there is
no doubt about that."

In Bolivia, in perhaps the most infamous of the ongoing "water wars," Aquas
del Tunari, a consortium of multinationals including Bechtel, was awarded a
$200 million dollar water project with an initial direct investment of
$15,635. The 40-year concession gave them a monopoly on all water in the
poverty-stricken community of Cochabamba. In order to achieve its guaranteed
15 percent return on investment, the company insisted that privately drilled
wells -- in the poorest part of the poorest country in the Americas -- be
metered and the community cooperatives that relied on them be charged.

The new water company dismissed concerns about rising costs, estimating that
fees would be hiked by no more than 40 percent. But prices for many rose 300
percent. When struggling Cochabambans received water bills equaling 30
percent of their salaries, they rioted. During the fighting that ensued, the
government cut power to local media outlets and used live ammunition against
the protesters, killing five.

The militarized response, instead of quelling the disturbance, brought even
more Bolivians into the mobilization. After weeks of intense protests, Aguas
del Tunari announced it would pull out of Bolivia, leaving its water system
(and $35 million in debt) to the government. Bechtel then turned around and
sued Bolivia for $25 million dollars in "lost profits" under the
International Center for the Settlement of Investment Disputes, a
closed-door tribunal run by the World Bank.

But free-market ideologues still to insist that the private firms can do a
better job than municipal governments. According to the World bank's
website: "Effective water management requires that water be treated as an
economic good ... private participation in water and wastewater utilities
has generally resulted in sharp efficiency gains, improved service, and
faster investment in expanding service."

The companies have also been caught up in bribery scandals. According to
Food and Water Watch's Hauter, "These contracts are usually awarded not
through competition but through some kind of shady dealings. In the case of
Atlanta, Suez, through it's U.S. subsidiary, gave campaign contributions to
the mayor's brother in South Carolina, even though they didn't have any
operations there. It's legalized bribery."

Battle lines in Hong Kong

In the background in Hong Kong a quid-pro-quo has developed -- wealthy
countries want access to services in exchange for reductions in agricultural
tariffs. The Council of Canadians' Barlowe told me, "The Northern countries
are saying that they'll make deep cuts in agricultural subsidies, which I
think is going to happen -- I think they'll abandon their own farmers to get
a deal, not maybe their big corporations, but they'll abandon their family
farmers in exchange for services because that's what they did in my
country."

The major transition to the GATS being pushed here is the process by which
countries can leverage open others' services. But the powerful countries are
frustrated by how slowly the developing countries have moved on the deal.

"Developing countries do not want this -- they've already had it with the
IMF's structural adjustment and they don't want it," says Barlowe. "So
they're upping the ante and trying to cluster the areas together -- they're
trying to use the services negotiation as a peg for agricultural subsidies.
Now, they're going to bring countries into this green room outside the WTO
process where they'll be pushed to accept privatization on a whole range of
issues. Technically, of course, they could say no. On paper, they're all
equal. But of course these poor countries are in terrible debt to the
wealthy countries that run the WTO, that run the World Bank, and if you say
no you're screwed."

Lauter added, "The countries from the Global South have their arms twisted
around all aspects of these trade agreements but especially in services. I
think if people understood what's being negotiated here with the GATS,
they'd be up in arms."

When it comes to "free trade," the devil is in the details. When those
details include water -- and essential resources -- the trade debate can
quickly become a struggle between life and death.

AlterNet wants to give a very special thanks to all of the generous people
who contributed to make Joshua's WTO reporting possible. Appearing
alphabetically, here is a list of non-anonymous contributors: William Allen,
Teresa Alouf, Louise Auerhahn, Ralph Benson, Elaine Booth, Jean Brooks,
William Butler, Merrily Butler, Barbara Carson, Rosemary Ciotti, Suzanne
Clare, Sofia Close, Yolande Cote, Rikk David, Kenneth Deed, Holojojo Ditto,
Susan Dobra, Fred Dryg, Anthony Durham, Dale East, Gabriel Fields, Lynne E.
A. Forest, Charles Francis, Morris Friedell, Isao Fujimoto, Jon Christopher
Geissmann, Culver Harrison, Daniel Hausman, Gisele Haven, Leigh Hill, Diane
Jones, Helen Kahn, Wynn Kapit, Sigurd Kihl, William Krumbien Jr., John
Kyper, Burt Lauderdale, Laura Lovelace-Guernsey, Linda Lupowitz, Diane
Martinez, Roy Mathews, Ron Mayes, Kathleen H. McKenna, John Mendolusky,
Leigh Miesse, Lisa Mitchell, Polly Lou Moore, D.M. Mossman, Dimity Mueller,
Alina Neacy, Ivan O'Neill, Jack Palmer, Alison Park, Robert Parker, Lin Yu
Peng, Julie Penny, William Phillips, Sheridan Phillips, Rik Reynolds, Sophie
Rogers-Gessert, Donna Sabin, Dianne Sandau, Mark Shulman, Treva Silverman,
Loerna Simpson, John Smart, Kelly Stevenson, Erinrose Sullivan, T.L. Sutton,
Lawrence Takvorian, Marlowe Thorne, Nick Van Kleeck, Rama Vemulapalli,
Suzanne Vogel, Barbara Wallace, Adam Werbach, Alan Young, Tracey Young,
Gilbert Zicklin, Audrey Zimmer. We really appreciate your kindness. 

Joshua <mailto:%20joshua.holland at alternet.org>  Holland is an AlterNet staff
writer. 

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